You may be able to get a personal loan while unemployed, but not having a traditional paycheck can make it more difficult to qualify.
Lenders generally want evidence that you have enough reliable income to repay what you borrow. A job is one obvious source of that income, but it isn’t necessarily the only one. Depending on the lender and your circumstances, income from unemployment benefits, retirement accounts, investments, freelance work, Social Security benefits, or other sources may be considered.
Your income is also only one part of the picture. A lender may consider your credit history, existing debts, requested loan amount, and other financial information when reviewing an application.
Before borrowing while unemployed, it is worth asking two separate questions: Can you qualify for the loan, and can you comfortably make the payments if finding your next job takes longer than expected?
Do You Need a Job to Get a Personal Loan?
Not necessarily.
Personal loan lenders generally want to determine whether you can repay the money you borrow. Regular employment can help demonstrate that ability, but a traditional job may not be required by every lender.
A lender may ask about your employment status and income when you apply. Depending on its requirements, other sources of income may include:
- Unemployment benefits
- Social Security benefits
- Pension or retirement income
- Investment or dividend income
- Freelance or self-employment income
- Rental income
- Alimony or child support, if you choose to disclose it
- Income from a spouse or partner that is regularly available to you
Under the Equal Credit Opportunity Act, creditors generally cannot discount or exclude income simply because it comes from certain sources, such as public assistance, although lenders can consider factors such as whether the income is likely to continue.
That last part can matter when you’re unemployed. Unemployment benefits, for example, may provide legitimate income today but are generally temporary. A lender evaluating a loan with a repayment term lasting several years may consider whether your income is likely to continue during that period.
Requirements vary by lender, so check the stated eligibility criteria before formally applying.
What Do Lenders Look at If You’re Unemployed?
Income matters, but lenders can evaluate more than your employment status.
Your credit reports provide information about how you have handled credit in the past, including your payment history, balances, accounts, and recent applications for credit. A lender may also use a credit score when evaluating your application.
Another common consideration is your debt-to-income ratio (DTI), which compares your monthly debt payments with your gross monthly income. If a large share of your income is already committed to existing debts, adding another monthly payment may be more difficult.
The amount you want to borrow matters too. A smaller loan with a manageable payment presents a different financial obligation than borrowing tens of thousands of dollars while your future income is uncertain.
Each lender establishes its own underwriting requirements, so meeting one lender’s criteria does not necessarily mean you will meet another’s.
For more information about borrowing and comparing loan options, visit the Personal Loans.
Can Unemployment Benefits Count as Income for a Personal Loan?
They may, depending on the lender and the circumstances.
Unemployment benefits are a source of income, but their temporary nature can affect how a lender evaluates them. State unemployment programs generally provide benefits for a limited period rather than indefinitely.
A lender may want to know not only how much income you currently receive, but also whether that income is reasonably expected to continue.
If unemployment benefits are only one part of your finances, you may also be able to document other eligible income. Depending on the lender, verification could involve bank statements, tax documents, benefit statements, or other financial records.
Be accurate about both the amount and source of your income when completing a loan application. A temporary loss of employment does not make alternative income irrelevant, but the lender still needs accurate information to evaluate your ability to repay the debt.
Can You Get a Personal Loan With No Income?
Getting a traditional personal loan without any income can be considerably more difficult.
Personal loans have to be repaid, and lenders generally evaluate whether an applicant has the financial capacity to make the required payments. Strong credit may help demonstrate a history of responsible borrowing, but it does not create money for next month’s loan payment.
If you have no current income, you may want to consider whether borrowing is the right solution before applying. Even if you find a loan available to you, the payment obligation begins regardless of whether your employment situation has improved.
Assets and savings can improve your overall financial position, and some lenders may consider additional financial information when evaluating an application. Requirements vary, however, and having money saved does not necessarily substitute for income under every lender’s criteria.
Does Applying for a Personal Loan While Unemployed Hurt Your Credit?
Being unemployed does not directly lower your credit score. FICO states that employment information is not used in calculating FICO Scores.
Applying for a loan is a different matter.
A formal personal loan application commonly results in a hard credit inquiry. The Consumer Financial Protection Bureau (CFPB) notes that hard inquiries can affect your credit score because scoring models consider recent applications for credit.
Some lenders allow consumers to check potential rates or eligibility using a soft credit inquiry before formally applying. Soft inquiries do not affect credit scores.
That distinction can be useful when your income is uncertain. Comparing potential options before submitting formal applications may help you avoid unnecessary hard inquiries.
For more on the credit impact, see how a personal loan application affects your credit.
Can a Co-Signer Help If You’re Unemployed?
A co-signer may help in some cases if the lender allows one.
A co-signer agrees to take responsibility for the loan if the primary borrower does not repay it. A lender may consider the co-signer’s credit and income when evaluating the application.
That creates real financial risk for the co-signer. If you miss payments, the co-signer may be required to repay the debt, and late payments can affect both borrowers’ credit histories. The obligation may also affect the co-signer’s ability to take on other debt, as the Federal Trade Commission (FTC) explains.
Some lenders offer joint loans instead, where two people apply as borrowers together. The structure and requirements vary, so understand exactly who is responsible for the debt before signing anything.
What About a Secured Personal Loan?
A secured personal loan requires collateral, which is an asset the lender may be able to claim if you fail to repay the debt.
Collateral can reduce some of the lender’s risk, but it shifts more risk onto you.
Depending on the loan, collateral might include funds in a savings account, a vehicle, or another asset accepted by the lender. Not all lenders offer secured personal loans, and acceptable collateral varies.
An unsecured personal loan does not require collateral. Instead, the lender evaluates factors such as your credit history, income, debts, and other financial information.
If you are considering a secured loan because unemployment has limited your other borrowing options, make sure the asset at risk is worth the tradeoff. A cash shortage is already unpleasant. Losing an asset because the loan became unaffordable is worse.
Should You Take Out a Personal Loan While Unemployed?
Qualifying for a loan and being able to comfortably afford it are not the same thing.
If you recently lost a job but have substantial savings, another reliable source of income, or a new job scheduled to begin soon, your situation may look very different from someone with no income and no clear timeline for returning to work.
Start with the monthly payment rather than the amount a lender is willing to offer.
How would you make the payment next month? What happens if you are still unemployed six months from now? How much of your remaining savings would the payments consume?
The annual percentage rate (APR), fees, and repayment term also affect the cost. A longer repayment term can make the monthly payment smaller while increasing the total amount of interest you pay.
Suppose you borrow $5,000 to cover expenses while searching for work. The loan can address today’s cash shortage, but it also creates another required monthly expense during a period when your income is unusually uncertain.
That doesn’t automatically make borrowing a bad decision. It does mean the repayment plan deserves at least as much attention as finding the money.
What Are Alternatives to a Personal Loan While Unemployed?
If the loan would primarily cover a temporary cash shortage, consider what other resources are available before adding debt.
You might contact existing creditors or service providers to ask whether they offer hardship or payment-assistance options. The CFPB recommends contacting creditors as soon as possible if you are having trouble making payments rather than waiting until you have already fallen behind.
Emergency savings can also provide a bridge if you have them, although using savings has its own tradeoffs. Depending on your circumstances, government or community assistance programs may help with necessities such as food, housing, utilities, or health expenses.
Borrowing from family or friends is another possibility for some people, but it is still worth agreeing on how and when the money will be repaid.
Be particularly careful with high-cost short-term borrowing when money is already tight. A product that solves this week’s shortage by creating a much larger repayment obligation can turn a temporary income problem into a longer debt problem.
How to Compare Personal Loans While Unemployed
If a personal loan still makes sense, start by identifying the legitimate income you can document and estimating the smallest amount you actually need to borrow.
Then compare potential loan terms, including:
- Annual percentage rate (APR)
- Origination and other lender fees
- Monthly payment
- Repayment term
- Total repayment cost
- Income requirements
- Credit requirements
- Collateral or co-signer requirements, if applicable
When available, checking potential rates or eligibility with a soft credit inquiry can help you compare options without immediately adding hard inquiries to your credit reports.
Most importantly, build the repayment plan before taking on the debt. A lender’s willingness to extend credit answers its question about the transaction. You still have to answer yours.
Frequently Asked Questions
Can I Get a Personal Loan With No Job but Good Credit?
Possibly. Good credit can strengthen your financial profile, but lenders generally also consider your ability to repay the loan. If you do not have a job, another reliable and documentable source of income may help you meet a lender’s requirements.
Does Unemployment Count as Income for a Personal Loan?
Unemployment benefits may be considered income by some lenders. Because benefits are temporary, a lender may also consider how long that income is expected to continue. Individual lender requirements vary.
Can I Get a Personal Loan With No Income?
It can be difficult to qualify for a traditional personal loan without any income because lenders generally evaluate your ability to make the required payments. Depending on the lender, other financial resources, a co-signer, or collateral may affect the application, but none necessarily substitutes for income.
Does Being Unemployed Hurt Your Credit Score?
Not directly. FICO states that employment information is not included when calculating FICO Scores. However, losing income can indirectly affect your credit if it causes you to miss payments or increase your debt balances.
The Bottom Line
You do not necessarily need a traditional job to get a personal loan. Depending on the lender, unemployment benefits, retirement income, investment income, freelance earnings, Social Security benefits, or other sources may be considered when evaluating your application.
The bigger question is whether borrowing makes sense while your future income is uncertain.
Compare lenders carefully, understand which income sources they consider, review the APR and fees, and calculate how the monthly payment fits into your budget if unemployment lasts longer than expected.
Getting access to money can solve an immediate problem. The repayment obligation is the part that sticks around.
